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good day subscribers thank you so much for joining me today I am Jeremy this is e Financial education Channel and today we're talking AMD stock and is AMD stock a buy will I be buying AMD stock this is one of the most highly requested videos from you guys in the comment section it is simply unbelievable how many times it has been requested within the last like let's say month or two how many times you guys have requested about AMD asking questions about AMD so you know what I thought I would just give the people what they want and we'll do an AMD video once and for all guys so we're going to find out if I'm going to be buying AMD stock at the end of this video I cannot wait to share this with you guys hit a thumbs up if you enjoy let's get into this so first off holy smokers are you freaking kidding me with this AMD up 47% in the past year onee change 47% that's freaking disgusting holy smokes Okay so what is this AMD we are a global Semiconductor Company by the way I'm in the 10K section of the AMD investor relations page in their annual report uh we are a global Semiconductor Company primarily offering x uh 86 microprocessors as a standalone devices or as incorporated into accelerated uh processing units apus chipsets discret graphic processing chips gpus and professional Graphics um a little more into what they do they a a a a CPU just so you guys know it's like the brain of brain of any type of um computer or something like that guys it's basically the brain of it you can read through there if you want on what a CPU is but just think of it as the brain of a device a brain of a laptop the brain of a PC something like that and then a GPU is basically anything that has to do with the graphics of it a GPU is a program programmable logic chip that renders images animations and video into increasingly being used to handle general computing tasks gpus are located in plug-in cards and a discrete processor so that is the main business that they're in CPUs which is basically the brain of it gpus which controls all the graphics that basically go into like a PC or something like that guys or or gaming system those kinds of things so that is the that is where their business is at now they're into some different things here they they're into the desktop which is their probably the B biggest business they're notebooks two in one some of those things you know that it's like a tablet one minute and then you can turn into a laptop they do chipsets they're into the commercial sector the graphics market and um also so the majority of their customers or excuse me the major customers for them are Sony Microsoft and HP all three of those companies are are basically Beyond 10% of their revenue so they get at least 10% of their revenue from each of those customers so they're getting a minimum of 30 plus% of their business from Sony from Microsoft and from HP now it's probably closer to a 5060 70% guys because the majority of their products come from those three those three companies they're selling into and which makes sense because one they're in the Sony PlayStation as you can see here um the Sony PlayStation this is a tear down of Sony PlayStation 4 the uh they use the AMD Jaguar cores and AMD Radeon gpus so they use both those chipsets the Xbox 360 here guys or excuse me the Xbox one this is uh also their breakdown and they use the Jaguar 8 core CPU and an AMD Radeon graphics GPU so and then obviously HP on the side HP is probably the biggest PC um or at least one of the biggest PC companies out there so it's kind of natural for AMD to get the majority of their their revenue from those three companies so there it is bit Diversified for you know example there so here's let's go over some risk factors if you're investing in AMD stock and some of the negatives on AMD stock this is their first risk factor they they put up in their annual report Intel corporation's dominance on the microprocessor market and its aggressive business practice practices May limit our ability to compete effectively Intel Corporation has been the market share leader from microprocessors for many years a decade two decades plus Intel's market share margins and significant financial resources enable it to Market its products aggressively to Target our core customers and channel partners with special in uh incentives and to influence customers to do business with us these aggressive activities have in the past and are likely to in the future result in lower unit sales and lower average sailing prices for many of the products um so basically what does that paragraph mean it's basically AMD say that Intel's super aggressive with pricing because they have so much scale Intel has so much scale that they can cut prices pretty low and if AMD wants to try to win a customer away from Intel right they need to come out at such a low price point that they end up either losing money or not making nearly the margin they are that's why AMD has been unprofitable year after year which we'll look at their income statement they they're like unprofitable for like a long long time guys at least the last 5 years that's what I looked into I be surprised if they've been unprofitable for 10 15 20 years and the question is can they ever get to a profitable place as long as Intel's the dominant leader there guys because Intel can just say oh no we'll charge you um you know $3 a chip or whatever and you know then amd's got to come in okay we'll do 250 and then AMD is hardly making any profit guys so it's a tough tough business for AMD so some other things that are going bad for AMD globally sales in 2016 um this is PC sales were down 6.2 % to 269 million unit shipments um so basically it's been five consecutive years that PC sales are down PC sales are down they're going to continue to probably go down they're probably never going to recover guys as eventually it'll be 200 million units and then it'll be 150 million units a year and then 100 million units so the pi is getting smaller and smaller that for PCs which is amd's core Market at the moment so that's something to take into account also AMD has completely missed out on the mobile Revolution as pretty much Nvidia has though both those companies have completely missed out they're not in the iPads they're not in the iPhones they're not in the Samsung devices and what you have is a situation that when iPads become so or you know when iPads become so I guess you say Advanced where you don't need a PC to use it anymore that's going to be even a worse thing for PCs currently I use my iPad or my iPhone or whatever smartphone if I hav a Samsung I using the Samsung for the majority of my Computing for the majority of my Computing and right now I use my MacBook a Macbook I bought last year I use that for like editing videos and things like that and that's what I currently use now when uh probably the next generation iPad comes out it's going to be so powerful that I will not even need to use my MacBook at that anymore which will completely eliminate the need for me personally to ever use PCS again if I want cuz I can do everything photography videography related on my phone or on an iPad because it's so powerful and it's so intuitive at that point the reason I haven't yet is because it's not intuitive enough and not powerful enough when that happens guys it's going to be even a worse thing for PC sales and this is another reason why PC sales are declining and will continue to decline because everybody's got their computer it's this and it's this this is the computers people are using in the future so that's kind of some trouble there so then we look at the VR Market and this has to do with gaming side of things now we're looking at the gaming side cuz that's the other biggest part that AMD plays in right well a lot of the VR type gaming and VR experience it's going through the phone and the phone is something AMD is not in so that's some other trouble and then we look at the Oculus riff which is a gaming system owned by Facebook and I could not find anywhere in the chip breakdown that AMD is in the Oculus Rift if you guys could please look into that if you know maybe they are in it I could not find anywhere that they are in the Oculus Rift so they might be missing out on VR Gaming as well which would me they missed out on the mobile Revolution and possibly miss out on the VR Revolution I don't know I would love to see you guys if you know that maybe they are in the Oculus but from my understanding they are not I could not find anywhere in the chipsets that they are in that then you take into account the mobile gaming Revolution this is taking people's time people only have so much time to game right they only have so much time for entertainment for gaming for anything right so Mobile gaming is huge and it's getting bigger and bigger and bigger and companies are realizing how powerful mobile gaming is how much money there is to be made on mobile gaming I own King Digital for a long time King King Digital stock they own the Candy Crush and Candy Crush sodas saga games and all those kind of games Farmville not Farmville excuse me Farm Heroes some of those kind of games right well that uh company was extremely profitable they're making they were making like 200 $0000 million plus a year actually they were making over $400 million excuse me I forgot how much they were really making they were making over $400 million profit profit per year profit supercell the the the company that's behind the uh Clash of Clans and Clash Royale and boom beach and those games that company is supposed to be making over $600 million in net income per year supposedly we don't know because it's a private company but from my from what I've heard they're making over $600 million per year so you're gonna have game designers focusing around mobile because I think a lot of places I think a lot of places want a piece of that pie guys when you have uh King Digital making 400 million plus a year in net income when you have companies like a supercell making 600 plus million dollar per year in net income and you have a lot of other smaller game makers making 50100 million net income per year guys it's a pretty profitable business so and all those all those games are played on here and they're played on here guys so that's another segment of the market that AMD is missing out on here guys so some things to take into account as far as the negatives go with AMD now as far as amd's net revenue so 2014 they did 5.5 billion in net revenue then they dropped all the way down to $3.9 billion a drastic drop there to 2015 and then last year they recovered a bit and up to 4.2 so revenue is going in the good right direction so that's a good sign however gross margin the line two lines under there you look at that and gross margin actually went down last year despite them having 300 plus million dollar more in Revenue it's a very bad sign then we go down there and we look toward the bottom we see net loss they lost around just under $500 million last year the year before they lost $660 million year before that they lost $400 million this is a this is a Serial company of losing money they money year after year after year looking at their balance sheet now cash and cash equivalence of 1.2 billion it doesn't look like they have much for Investments uh not much for short-term debt they do have long-term debt of about 1.3 billion which basically cancels out the cash I look at AMD and this is absolutely absolutely not a stock I would invest in personally that doesn't mean you can't that doesn't mean you can't make money in it you know just because Jeremy doesn't want to be in it doesn't mean the stock may go up another 500% next year who knows personally I is no way I would invest in this company they're missing out on the mobile Revolution they're probably going to miss out on the VR Revolution unless they do something huge with um Oculus Rift and some of those kinds of things they're kind of getting out in that gaming Forefront and PC sales one of the main parts of their business is declining year after year after year and you have game makers now for the PlayStation the Xbox the game makers they want to charge for you to even get online which is why I've never bought another PlayStation or won't ever be in the future and all my friends aren't as well cuz we don't want to pay 50 whatever dollars a month it is plus now games are like 60 65 bucks for a brand new game it's getting absolutely ridiculous the prices are charging so uh I don't personally have time to play mobile games but when I did have time I would play mobile games over my Playstation 3 because it was like uh cheaper it was straight up it's cheaper and it was actually more fun to me to play Clash of Clans and some of those games than it was to actually play Call of Duty so I'm looking at things here and does this mean to end for AMD probably not can they do some things to maybe recover maybe but when I look at a company that loses money every single year when are they going to turn around if they maybe just lost money one year maybe two years then maybe you can say okay now they're going to turn it around but when they lose money year after year after year after year after year all the way you can look way back and their revenues have I mean the revenue recovered a bit last year but they're still down $1.3 billion from what they did in 200 what was that 2014 they're still down $1.3 billion from what they did in 2014 guys so and then their balance sheet is just an okay balance sheet they got more debt and they have cash so why would I want to be an AMD stock and it's gone up 500% the last year there's no reason for me to be in a stock that loses money that doesn't have a great balance sheet that has a bunch of products that are in Decline a bunch of cyclical products that are in Decline makes no sense for me to be an AMD whatsoever however I know a lot of you guys are in AMD stock so you know don't hate me for this video but I got to be straight up with you I mean it's not a stock I'm interest in whatsoever so that's fine but anyways I hope you guys enjoyed this day unless you're an AMD shareholder I'm sure you're not if you want to give me a thumbs down that's fine but no I would seriously love if you guys in the comment section if you are an AMD shareholder if you could please share your opinion on AMD and while you're bullish on it because I would love to hear I'm obviously very bearish on the stock I would love to hear a bullish point of view in why you're excited for the stock and why the stock you know the revenues can recover why they can get propped back to profitability what's the realistic scenario for that and those kinds of things I would love to hear from you guys I welcome all points of view if you just came across this channel you may want to subscribe we talk Personal Finance in Channel we talk entrepreneurship I'm an actual business owner we talk to stock market the most of everything including breaking down stocks so every once in a while I'm telling you if I would buy them thank you for watching guys and have a great day
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